Fonterra Cooperative Group has maintained its forecast for a stronger payout to its farmers for the 2018 season despite the recent decline in dairy prices on the GlobalDairyTrade platform.
In presentations for the annual shareholders' meeting in Hawera this morning, the cooperative reiterated its forecast 2017/18 payout of $6.75 per kilogram of milk solids plus earnings per share in a range of 45-to-55 cents, making the forecast total available payout of $7.20 to $7.30, before retentions. The final cash payout was $6.52 for the 2016/17 season for a 100 per cent share-backed farmer.
Chair John Wilson said farmers enjoyed a good season in 2016/17 "after two seasons of unusually low milk prices". Apart from that, the company presentations gave few specifics on the outlook.
Some analysts have been speculating the 2018 forecasts could be under pressure given the recent weakening in prices. Whole milk powder fell 0.5 per cent to US$3,014 (NZ$4,375) a tonne in the last GDT auction on October 17, the lowest since the April 17 sale.
OMF said last month that global supply/demand dynamics "suggest scope for a further significant correction in the milk fat premium and we see potential for considerable downside risk to the farmgate milk price."